TNT (9 Ball)

This is a copy and paste from The Motley Fool. I removed all of the advertising and I think it makes some very good points for the situation we will soon be in.

Last week I told the story of two investors who went down very different paths – the one with all the degrees, training, and pedigree ended up bankrupt, the country secretary a multimillionaire.

Here’s another instructive story about two people who handled money in totally different ways.

Gary Kremen founded online dating site Match.com in 1995. When The New York Timesinterviewed him in 2007, he was 43 years old and worth $10 million.

He’s a huge success by any standard. Still, he didn’t feel rich.

Kremen lived in Silicon Valley with friends who were far richer. He “logs 60- to 80-hour workweeks because, he said, he does not think he has nearly enough money to ease up,” the Times wrote.

“You’re nobody here at $10 million,” Kremen said.

Now meet Pete. He runs a popular blog called Mr. Money Mustache. He’s 40 years old and has been retired for almost a decade.

Pete lives in Colorado with his wife and 9-year-old son in what he calls “a badass life of leisure.” He and his wife quit work at age 30 when they owned a house outright and had around $600,000 in investments, generating enough money to spend $25,000 a year for life, “which goes quite far if you have no rent or mortgage to pay” he told Marke****ch.

One of the most important money lessons is that wealth is relative. Someone with millions in the bank can feel broke, while someone with a modest stash can feel like they’re on top of the world, so rich that they can retire 15 years after puberty.

Think about this. The group belonging to the “1%” richest Americans has become a symbol of the rich elite. But if you earn more than $34,000 in America, you are part of the richest 1% of the globe, even adjusted for differences in purchasing power, according to World Bank economist Branko Milanovic.

We always think about wealth as a number. But it’s really just a feeling, a product of your own expectations.

This is so important to understand because a lot of people talk about how to get rich. It involves making a lot of money. But to stay rich, you have to do something else. You have to ensure that your expectations don’t grow faster than your wealth.

I’ve seen so many people get this wrong.

In college I worked at a private country club (I’ve talked about this job before; it’ll come up again). The clientele had more money than I could dream of, with private jets, yachts, and Lamborghinis.

But the more I worked with them, the more I realized they were some of the most unhappy, uptight, cranky, and unsatisfied people I had ever met. Society tells you these people should be walking orbs of happiness. They were anything but.

Part of this is because they were Type-A personalities who couldn’t slow down. But part of it was because for every dollar of wealth they gained, they moved the goalpost of success two dollars down the field. The only thing that grew faster than their bank accounts was their desire for another house, another car, and another boat.

As Nelson Hunt observed after making a killing on precious metals in the 1980s, “A billion dollars ain’t what it used to be.” (It’s perhaps instructive that Hunt filed for bankruptcy after a failed attempt to corner the world market in silver.)

Anyone in that situation won’t feel rich, regardless of how much money they have. It’s worse than running in circles. It’s running backward, 60 to 80 hours a week.

A person who makes $50,000 a year but only needs $30,000 to be happy is much richer than the person who makes $1 million but needs $1.1 million. This seems obvious, but it’s shocking how many people ignore their own expectations when trying to improve their financial lives.

I’m convinced that the key to becoming a successful investor is the ability to anchor your expectations, just as Pete has done. Otherwise you’ll end up like Gary – lots of money, but perpetually unsatisfied with what you have. What good is that?

After basic needs are covered, each dollar in extra income doesn’t produce much extra happiness because you get used to your new car and nice clothes nearly overnight. It’s called the hedonic treadmill.

What does increase people’s happiness, more than anything, is having control over your time, autonomy in your work, and flexibility in your schedule.

The rich folks at my country club didn’t feel rich because the more money they made, the more stuff they wanted, which required them to work harder, which made their lives more busy and complicated.

Pete felt rich because he kept his expectations low and used his modest savings to take complete control over his time and retire at 30. Here’s how he put it:

“The quickest way to turn things around [in your financial life] is to realize that you are in much more control than you realize. The time to reach retirement depends on only one thing: your savings rate as a percentage of your take-home pay. And this depends entirely on how much you spend. So the moment you can learn to live a less expensive life, suddenly the clouds clear up and the financial picture brightens considerably.”

This doesn’t mean living like a miser. I don’t want to live like a monk.

But regardless of how much money you think you’ll need to be happy, the key to not only getting rich but staying rich is allowing your money to grow at the same rate as — or faster than — your desire to spend it.